This paper presents an observer-based approach to the determination of environment forces acting on a rigid body. Actuation forces, measured positions and orientations and identification of inertial parameters are used for this purpose. It is also shown that environment force estimates can be used in turn to correct rigid-body velocity estimates generated by observers, leading to accurate, low-noise estimates during contact tasks. The approach, shown to also apply to general serial mechanisms, is supported by experimental data obtained with a magnetically levitated wrist.>